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TESTE DEIN WISSEN

What are the impacts of globalization on the UK economy?

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TESTE DEIN WISSEN
  • Increased trade 
  • Greater choice of imports
  • Increased competition / lower prices 
  • Lower costs for firms
  • Migration
  • Global economic cycle effects the UK more
  • Shifting sectors/structural unemployment
  • Tax avoidance
  • Growing inequality
  • Environmental problems
Lösung ausblenden
TESTE DEIN WISSEN

When oil runs out, how is the economy affected?

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TESTE DEIN WISSEN

Many countries who produce raw materials may find the high output only lasts for a few years. But, when the oil runs out, the economy has been adversely affected and struggles to catch up where it left off.

  • Manufacturing export industries have shrunk and fallen behind - Because of declining output and investment, it can take many years for the exporting industries to catch up. Therefore, post-oil economies can struggle with lower economic growth.
  • Current account deficit - With oil exports, countries can run a current account surplus, but when oil exports drop their old exporting industries have faded away so they are left with large current account deficits,
  • Falling tax revenue - With oil, governments find it easy to raise tax revenue. But, when oil revenues dry up, they need to raise taxes on income and spending which can lead to lower growth and lower living standards
  • Unemployment - With falling GDP, the demand for high-end services will decline, causing unemployment amongst many service sector workers.
Lösung ausblenden
TESTE DEIN WISSEN

Using chains of reasoning, explain the affect of globalisation on producers (evaluate).

Lösung anzeigen
TESTE DEIN WISSEN

Firms will be producing on a large scale and so will benefit from economies of scale and higher profits. Further, technology transfer is likely to occur - that is when MNCs invest in other countries they are likely to bring modern technology with them. Similarly, MNCs are likely to introduce modern managerial techniques designed to increase productivity. In turn, both of these may be adopted by local producers, resulting in increased productivity.


Ev: However, local producers who are uncompetitive may be forced out of business.

Lösung ausblenden
TESTE DEIN WISSEN

How does globalisation impact workers?

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TESTE DEIN WISSEN
  • Workers can take advantage  of job opportunities across the globe  , rather than just in their home country
  • However, there could be  structural unemployment. For example, in the UK after the collapse of the ship building and mining industries, there was a lot of structural unemployment. This is because it was more efficient for manufacturing to occur abroad, so production shifted to lower labour cost nations 
    • HOWEVER, It could be ARGUED did  countries would have had the change from agriculture to manufacturing to services anyway , and  globalization simply sped it up
  • When production shifts to lower labour cost countries, the creation of jobs could be seen as either  beneficial or harmful  . On one hand, MNCs could be exploiting their labour and  providing poor working conditions in, for example, sweatshops
    • On the other hand,  working in a sweatshop  might Provide a  higher, more stable income than any alternative  ,: such as agriculture. 
  • In terms of employment, some people have gained whilst others have lost. There have been large scale job losses in the western world in manufacturing sectors as these jobs have been transferred to countries such as China and Poland. 
  • Increased migration may affect workers by lowering wages but migrants can also provide important skills and an increase in AD which increases the number of jobs. 
  • International competition has led to a fall in wages (or reduced growth) for low skilled workers in developed countries whilst increased those in developing countries.
  • The wages for high skilled workers appear to be increasing, since there is more demand for their work; this is increasing inequality.
  • TNCs tend to provide training for workers and create new jobs
Lösung ausblenden
TESTE DEIN WISSEN

What is contagion? 

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TESTE DEIN WISSEN

A contagion is the spread of an economic crisis from one market or region to another and can occur at both a domestic or international level

Lösung ausblenden
TESTE DEIN WISSEN

What is transfer pricing?

Lösung anzeigen
TESTE DEIN WISSEN
  • MNCs engage in a form of tax avoidance referred to as transfer pricing.
  • This refers to the price that has been charged by one part of a company for products and services it provides to another part of the same company.
  • Tis system enables MNCs to declare profits in the country in which corporation tax is lowest.


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TESTE DEIN WISSEN

What is foreign direct investment?

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TESTE DEIN WISSEN

Occurs when a company in one country establishes operations in another country or when it acquires physical assets or a stake in an overseas company.

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TESTE DEIN WISSEN

How does globalisation impact producers and consumers?

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TESTE DEIN WISSEN
  • Consumers and producers can earn the  benefits  of specialization and economies of scale as firms become larger


Firms

  • Firms operate in a more competitive environment, which encourages them to lower their average costs and become more efficient
  • Producers can make their average costs lower by switching production to places with cheaper labour
    • The  spread of technology has resulted in firms being able to employ the most advanced machines and production methods 
  • This rise in average consumer incomes could offset some of the lower costs of productionfor firms
    • This is especially due to increased demand from China, which has contributed to the increase in price of commodities, and therefore pushed up the price of raw materials
  • Firms are able to source products from more countries and sell them in more countries. This reduces risk since a collapse of the market in one company will have a smaller impact on the business. 
  • They are able to employ low skilled workers much cheaper in developing countries and can exploit comparative advantage and have larger markets, both of which can increase profits. 
  • Firms who are unable to compete internationally will lose out.


Consumer

  • Globalization leads to a general increase in world GDP, which increases consumer living standards and helps lift people out of absolute poverty
    • However, it is hard to calculate the proportion of growth which was due to globalization
  • Some consumers gain more from globalization than others. Globally, there are fewer people in extreme poverty, but this has not been the case in Sub-Saharan Africa. There could be increased inequality
  • Consumers could take advantage of a range of goods and services  reflected because of the increased availability of goods and services (more choice)
    • However, some services might become homogenized, such as hotels.
  • It can lead to lower prices as firms take advantage of comparative advantage and produce in countries with lower costs, for example low labour costs. 
    • In other cases, it is leading to a rise in prices since incomes are rising and so there is higher demand for goods and services
  • Many consumers worry about the loss of culture
Lösung ausblenden
TESTE DEIN WISSEN

What are the key characteristics of globalisation?

Lösung anzeigen
TESTE DEIN WISSEN
  • Increased trade as a proportion of GDP 
  • Increased foreign direct investment (FDI)
  • Greater free trade
  • Greater movement of labour
  • Increased capital flows.
  • The growth of multi-national companies.
  • Increased integration of the global trade cycle.
  • Increased communication and improved transport, effectively reducing barriers between countries
Lösung ausblenden
TESTE DEIN WISSEN

How does globalisation affect individual countries?

Lösung anzeigen
TESTE DEIN WISSEN
  • There could be trade imbalances between countries. For example, the US runs a large current account deficit with China, who has a large current account surplus.
  • There could be imbalances and inequalities in consumers 'and countries' accesses  to health, education and markets 
  • Within individual countries, there could be  income and wealth inequalities if the benefits and costs of globalization are   not evenly spread . This is evident in China, where the population in the rural and urban areas have vastly different levels of income and living standards. 
  • Culture could spread across the globe . Some might say this has weakened culture and that there has been a  loss of cultural diversity due to global brands . However, others will argue that the spread of culture has been positive and helped to improve their quality of life
Lösung ausblenden
TESTE DEIN WISSEN

What is globalisation?

Lösung anzeigen
TESTE DEIN WISSEN
  • The process of countries' economies becoming increasingly interdependent
  • Globalisation is a process by which economies and cultures have been drawn deeper together and have become more inter-connected through global networks of trade, capital flows, and the rapid spread of technology and global media. 
Lösung ausblenden
TESTE DEIN WISSEN

What factors contribute to globalisation?

Lösung anzeigen
TESTE DEIN WISSEN
  • Increasing number and influence of global companies
    • There has been a large increase in foreign direct investment by firms over the past 50 years. This has led to an increase in the number of businesses that are owned by an entity in another country. 
  • Improvements in transport infrastructure and operations
    • Individuals and small businesses are now able to ship their products internationally due to improvements in transportation. This has resulted in firms and individuals gaining access to much larger markets from a range of international countries. 
  • Improvements in communications technology and IT
    • The rise of the internet has meant that goods / services can now be sold online. What this means for businesses is that they can have their headquarters in one location, but can still sell to people in other locations around the world. This reduces costs massively for firms as they are not restricted to selling their products in only locations where they have businesses placed. 
  • Trade liberalisation and trading blocs
    • The increase in trade amongst countries has been down to the trade liberalization that has taken place over the years, helped by the introduction of the world trade organization and trading blocs such as the European Union. Both of which encourage free trade amongst countries. As such, the interdependence of countries has increased massively. 
  • The opening up of China and collapse of communism in Eastern Europe
  • Increased importance of global companies or MNCs 
    • MNCs have undertaken much FDI, which frequently involves manufacturing to a country where production costs are lower (offshoring)
Lösung ausblenden
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  • 239 Studierende
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Beispielhafte Karteikarten für deinen Theme 4: A Global Perspective Kurs an der University College London, University of London - von Kommilitonen auf StudySmarter erstellt!

Q:

What are the impacts of globalization on the UK economy?

A:
  • Increased trade 
  • Greater choice of imports
  • Increased competition / lower prices 
  • Lower costs for firms
  • Migration
  • Global economic cycle effects the UK more
  • Shifting sectors/structural unemployment
  • Tax avoidance
  • Growing inequality
  • Environmental problems
Q:

When oil runs out, how is the economy affected?

A:

Many countries who produce raw materials may find the high output only lasts for a few years. But, when the oil runs out, the economy has been adversely affected and struggles to catch up where it left off.

  • Manufacturing export industries have shrunk and fallen behind - Because of declining output and investment, it can take many years for the exporting industries to catch up. Therefore, post-oil economies can struggle with lower economic growth.
  • Current account deficit - With oil exports, countries can run a current account surplus, but when oil exports drop their old exporting industries have faded away so they are left with large current account deficits,
  • Falling tax revenue - With oil, governments find it easy to raise tax revenue. But, when oil revenues dry up, they need to raise taxes on income and spending which can lead to lower growth and lower living standards
  • Unemployment - With falling GDP, the demand for high-end services will decline, causing unemployment amongst many service sector workers.
Q:

Using chains of reasoning, explain the affect of globalisation on producers (evaluate).

A:

Firms will be producing on a large scale and so will benefit from economies of scale and higher profits. Further, technology transfer is likely to occur - that is when MNCs invest in other countries they are likely to bring modern technology with them. Similarly, MNCs are likely to introduce modern managerial techniques designed to increase productivity. In turn, both of these may be adopted by local producers, resulting in increased productivity.


Ev: However, local producers who are uncompetitive may be forced out of business.

Q:

How does globalisation impact workers?

A:
  • Workers can take advantage  of job opportunities across the globe  , rather than just in their home country
  • However, there could be  structural unemployment. For example, in the UK after the collapse of the ship building and mining industries, there was a lot of structural unemployment. This is because it was more efficient for manufacturing to occur abroad, so production shifted to lower labour cost nations 
    • HOWEVER, It could be ARGUED did  countries would have had the change from agriculture to manufacturing to services anyway , and  globalization simply sped it up
  • When production shifts to lower labour cost countries, the creation of jobs could be seen as either  beneficial or harmful  . On one hand, MNCs could be exploiting their labour and  providing poor working conditions in, for example, sweatshops
    • On the other hand,  working in a sweatshop  might Provide a  higher, more stable income than any alternative  ,: such as agriculture. 
  • In terms of employment, some people have gained whilst others have lost. There have been large scale job losses in the western world in manufacturing sectors as these jobs have been transferred to countries such as China and Poland. 
  • Increased migration may affect workers by lowering wages but migrants can also provide important skills and an increase in AD which increases the number of jobs. 
  • International competition has led to a fall in wages (or reduced growth) for low skilled workers in developed countries whilst increased those in developing countries.
  • The wages for high skilled workers appear to be increasing, since there is more demand for their work; this is increasing inequality.
  • TNCs tend to provide training for workers and create new jobs
Q:

What is contagion? 

A:

A contagion is the spread of an economic crisis from one market or region to another and can occur at both a domestic or international level

Mehr Karteikarten anzeigen
Q:

What is transfer pricing?

A:
  • MNCs engage in a form of tax avoidance referred to as transfer pricing.
  • This refers to the price that has been charged by one part of a company for products and services it provides to another part of the same company.
  • Tis system enables MNCs to declare profits in the country in which corporation tax is lowest.


Q:

What is foreign direct investment?

A:

Occurs when a company in one country establishes operations in another country or when it acquires physical assets or a stake in an overseas company.

Q:

How does globalisation impact producers and consumers?

A:
  • Consumers and producers can earn the  benefits  of specialization and economies of scale as firms become larger


Firms

  • Firms operate in a more competitive environment, which encourages them to lower their average costs and become more efficient
  • Producers can make their average costs lower by switching production to places with cheaper labour
    • The  spread of technology has resulted in firms being able to employ the most advanced machines and production methods 
  • This rise in average consumer incomes could offset some of the lower costs of productionfor firms
    • This is especially due to increased demand from China, which has contributed to the increase in price of commodities, and therefore pushed up the price of raw materials
  • Firms are able to source products from more countries and sell them in more countries. This reduces risk since a collapse of the market in one company will have a smaller impact on the business. 
  • They are able to employ low skilled workers much cheaper in developing countries and can exploit comparative advantage and have larger markets, both of which can increase profits. 
  • Firms who are unable to compete internationally will lose out.


Consumer

  • Globalization leads to a general increase in world GDP, which increases consumer living standards and helps lift people out of absolute poverty
    • However, it is hard to calculate the proportion of growth which was due to globalization
  • Some consumers gain more from globalization than others. Globally, there are fewer people in extreme poverty, but this has not been the case in Sub-Saharan Africa. There could be increased inequality
  • Consumers could take advantage of a range of goods and services  reflected because of the increased availability of goods and services (more choice)
    • However, some services might become homogenized, such as hotels.
  • It can lead to lower prices as firms take advantage of comparative advantage and produce in countries with lower costs, for example low labour costs. 
    • In other cases, it is leading to a rise in prices since incomes are rising and so there is higher demand for goods and services
  • Many consumers worry about the loss of culture
Q:

What are the key characteristics of globalisation?

A:
  • Increased trade as a proportion of GDP 
  • Increased foreign direct investment (FDI)
  • Greater free trade
  • Greater movement of labour
  • Increased capital flows.
  • The growth of multi-national companies.
  • Increased integration of the global trade cycle.
  • Increased communication and improved transport, effectively reducing barriers between countries
Q:

How does globalisation affect individual countries?

A:
  • There could be trade imbalances between countries. For example, the US runs a large current account deficit with China, who has a large current account surplus.
  • There could be imbalances and inequalities in consumers 'and countries' accesses  to health, education and markets 
  • Within individual countries, there could be  income and wealth inequalities if the benefits and costs of globalization are   not evenly spread . This is evident in China, where the population in the rural and urban areas have vastly different levels of income and living standards. 
  • Culture could spread across the globe . Some might say this has weakened culture and that there has been a  loss of cultural diversity due to global brands . However, others will argue that the spread of culture has been positive and helped to improve their quality of life
Q:

What is globalisation?

A:
  • The process of countries' economies becoming increasingly interdependent
  • Globalisation is a process by which economies and cultures have been drawn deeper together and have become more inter-connected through global networks of trade, capital flows, and the rapid spread of technology and global media. 
Q:

What factors contribute to globalisation?

A:
  • Increasing number and influence of global companies
    • There has been a large increase in foreign direct investment by firms over the past 50 years. This has led to an increase in the number of businesses that are owned by an entity in another country. 
  • Improvements in transport infrastructure and operations
    • Individuals and small businesses are now able to ship their products internationally due to improvements in transportation. This has resulted in firms and individuals gaining access to much larger markets from a range of international countries. 
  • Improvements in communications technology and IT
    • The rise of the internet has meant that goods / services can now be sold online. What this means for businesses is that they can have their headquarters in one location, but can still sell to people in other locations around the world. This reduces costs massively for firms as they are not restricted to selling their products in only locations where they have businesses placed. 
  • Trade liberalisation and trading blocs
    • The increase in trade amongst countries has been down to the trade liberalization that has taken place over the years, helped by the introduction of the world trade organization and trading blocs such as the European Union. Both of which encourage free trade amongst countries. As such, the interdependence of countries has increased massively. 
  • The opening up of China and collapse of communism in Eastern Europe
  • Increased importance of global companies or MNCs 
    • MNCs have undertaken much FDI, which frequently involves manufacturing to a country where production costs are lower (offshoring)
Theme 4: A Global Perspective

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